Scholarships and fellowships, science and engineering faculty hires, a stash for a rainy day – those are some of the ways the University of Minnesota will tap roughly $25 million the Legislature spared in trimming the school’s allowance this summer.

The U got $545.3 million from the state – a 7.8 percent cut, but better than the $520 million it had braced and budgeted for. The extra money is a tiny fraction of the university’s $3.7 billion budget. But U President Eric Kaler’s decisions on spending it offer the first glimpse into his priorities.

“This budget highlights the things I think are important,” Kaler said in an interview. “The focus on excellence and access is very important to me.”

The university’s Board of Regents praised Kaler’s decisions at its monthly meeting Friday and approved them unanimously.

But some members chafed at a new legislative move tying 1 percent of state funding to five goals of boosting graduation rates, research spending and private fundraising. The board signed off on the mandate even as some members questioned its constitutionality and effect on the university’s independence.

In explaining his budget tweaks, Kaler pointed out that students took on about a third of the hit from this past spring’s budget cuts in the form of tuition increases.

“It’s only fair to take a proportionate share of this funding and return it to students,” he said.

The school said it’s too late to offer student tuition relief this fall. But in the spring, some 13,400 low- and middle-income Minnesota students will get on average $310 in a one-time scholarship, for a total of $4.15 million.

Kaler hopes to eventually spend $8.3 million to shrink a planned 5 percent tuition increase next fall to 3.5 percent.

The school will also earmark $6 million over three years for doctoral fellowships in a bid to help students wrap up work on their degrees faster.

The U will use $4 million of the total to fill faculty positions left vacant in recent leaner years. Most new hires will benefit science, technology, engineering and math fields, the Carlson School of Management and the College of Liberal Arts.

Among other investments: $3 million to mitigate state cuts to a medical professionals training program and $800,000 to reverse cuts to the College of Veterinary Medicine’s Veterinary Diagnostic Lab.

The U will hang onto $6.1 million, anticipating further budget uncertainty next school year.

“What strikes me is, he didn’t spend it all,” said Regent Dean Johnson of Kaler’s recommendations. “He set aside some money for a rainy day.”

Kaler’s decisions got high marks all around, even as regents such as Steve Sviggum expressed concern that some of the one-time investments in the president’s proposal, such as the medical training program, actually spell ongoing spending.

“I think it’s incumbent upon us and we are compelled to look at efficiencies,” Sviggum said.

The board also heard capital requests worth $409 million, including $200 million for a new academic ambulatory-care clinic. The regents will vote on the requests at their October meeting; the university would turn to the state for $269 million of the overall cost.

The board had a spirited discussion about legislators’ decision during this summer’s special session to tie about $5 million in U funding to measurable goals for the school, such as awarding at least 13,500 degrees this school year.

Some members felt that in taking on the board’s role of setting and monitoring goals, legislators had stepped on regents’ toes – and onto a slippery slope.

“I think this is an intrusion on the spirit of the law with respect to our autonomy,” said Regent Patricia Simmons.

Others thought the new statute would give the school a chance to show off its accomplishments to both the state and public.

“It’s difficult when money comes with strings attached,” said Regent Laura Brod. But she added, “I support moving in this direction, not just because we were told to but because it will be good for us.”

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